Allied Capital Commercial Corp.'s second quarter earnings increase by 39%.

WASHINGTON--(BUSINESS WIRE)--July 31, 1996--Allied Capital Commercial Corp. (Nasdaq:ALCC) announced second quarter results Wednesday.

For the three months ended June 30, 1996, the company reported net income of $7.7 million, a 39% increase over earnings of $5.5 million for the three months ended June 30, 1995. Earnings per share for the quarter increased to 55 cents per share from 41 cents per share for the second quarter of 1995.

The weighted average shares outstanding increased 3.4% since June 30, 1995. Net income for the quarter included net investment gains of $2.3 million, largely as a result of early loan payoffs, or 16 cents per share, as compared to $0.2 million, or 2 cents per share, for the second quarter of 1995.

John Scheurer, president and portfolio manager commented, "The second quarter 1996 earnings were significantly increased by the net investment gains on loans that had been purchased at a discount. We continue to recognize these investment gains as discounted loans in the portfolio pay off at or near their face values."

He continued, "We still have approximately $31 million of unamortized discount associated with loans in the portfolio, and we should convert a good portion of this discount into future income as net investment gains or income."

The 1996 second quarter investment income and gains include the consolidation of Allied Capital Funding, LLC, an 82%-owned subsidiary of the company that was established during the fourth quarter of 1995 for purposes of securitizing a portion of the company's loans, and the loans of a private REIT.

Second quarter 1996 consolidated assets, liabilities and operating results include the accounts of the company and Allied Capital Funding, LLC, which are offset by the resulting minority interest.

For the six months ended June 30, 1996, Allied Capital Commercial reported net income of $14.5 million, a 27% increase over net income of $11.4 million for the six months ended June 30, 1995.

Earnings per share for the cumulative period in 1996 totaled $1.05 per share, versus 85 cents per share for the cumulative period in 1995. During the second quarter of 1996, the company invested $22 million in new mortgage loans. -0-

(in thousands, except per share amounts)

                             6/30/96  Per Share   12/31/95  Per Share

Financial Position Information
Total investments in
 mortgage loans             $328,358       --     $273,510       --
Total assets                 342,950       --      297,891       --
Shareholders' equity         192,999       --      186,724       --

                              3 mos. ended          3 mos. ended
                           6/30/96   Per Share   6/30/95   Per Share

Operating Information
Total investment income     $ 11,266   $ 0.81     $  8,202   $ 0.61
Income before net
 investment gains              6,186     0.44        5,317     0.39
Net investment gains           2,253     0.16          230     0.02
Minority interest               (756)   (0.05)          --       --
Net income                  $  7,683   $ 0.55     $  5,547   $ 0.41

Actual shares outstanding     13,960       --       13,464       --
Weighted avg. shares
 outstanding                  13,934       --       13,479       --

Distributions to Shareholders
Regular dividends                 --   $ 0.46           --   $ 0.40

                              6 mos. ended          6 mos. ended
                           6/30/96   Per Share   6/30/95   Per Share

Operating Information
Total investment income     $ 21,359   $ 1.54     $ 15,482   $ 1.15
Income before net
 investment gains             11,908     0.86       10,446     0.78
Net investment gains           4,060     0.29          978     0.07
Minority interest             (1,431)   (0.10)          --       --
Net income                  $ 14,537   $ 1.05     $ 11,424   $ 0.85

Actual shares outstanding     13,960       --       13,464       --
Weighted avg. shares
 outstanding                  13,873       --       13,435       --

Distributions to Shareholders
Regular dividends                 --   $ 0.90           --   $ 0.78

-0-

Allied Capital Commercial Corp. is a publicly traded commercial mortgage REIT. The company is headquartered in Washington, D.C. and traded on the Nasdaq National Market, symbol ALCC. There are a total of 13,959,732 shares outstanding. The company currently pays a regular quarterly cash dividend of 46 cents per share.

For 1995, the company paid a total of $1.78 per share; for 1994, distributions totaled $1.47 per share. A recent stock quote is $20.875 per share and the shares are marginable. For additional information or a copy of the company's annual report, please contact Allied Capital's Investor Relations Department at 202/973-6383 or fax to 202/659-2053.

CONTACT: Allied Capital, Washington

Suzanne Sparrow, 202/973-6326